CareTech Holdings(LSE: CTH) found itself on the front foot and striding to fresh record peaks on Monday after a positive reception to half-year numbers.
The retirement home operator -- which has gained almost 40% in value since the start of 2017 -- has hit peaks of 440p per share today. And I believe CareTech trades on ultra-low valuations that should facilitate further gains
The Potters Bar-based business advised that revenue increased 11.3% during October-February, to £78.8m, a result that pushed underlying pre-tax profit 13.9% higher to £13.1m.
Additionally, in a separate release CareTech advised that it had closed out a further acquisition since the half year's end. The firm has snapped up specialist residential care provider Selborne Care for £16.9m. The latter operates 57 beds across eight sites in the Midlands and South West of England.
And CareTech is not done yet on the M&A front, executive chairman Farouq Sheikh commenting today that "a number of potential acquisition opportunities are under active consideration and in addition we have a strong organic pipeline of additional beds in reconfigured services and in new services."
The need for social care is a growing phenomenon, with Britain's rapidly-ageing population increasing the demand for CareTech's services. This backcloth naturally bodes well for the company's long-term earnings outlook, and the business is aiming to make the most of this trend through its aggressive acquisition drive.
The City expects it to endure some earnings woe in the near term, and predictions of a 10% fall in the year to September 2017 would put the company's long record of bottom-line growth to the sword.
Still, this drop is forecast to be a mere hiccup, and CareTech is expected to get firing again as soon as next year, and a 3% advance is currently predicted.
And I reckon a prospective P/E ratio of 12.8 times is attractive value given its positive outlook.
Furthermore, CareTech's progressive dividend policy adds an extra sweetener for investors. Last year's 9.25p per share reward (up 11.6% year-on-year) is expected to step to 9.6p this year and to 10.1p in fiscal 2018, figures that yield 2.1% and 2.3% respectively.
Recruitment firm SThree (LSE: STHR) is also in great shape to generate strong earnings growth, in my opinion.
It announced last week that gross profit edged 2% higher during December-May, with the bottom line gaining momentum during the final quarter when profits leapt 4%.
Not only does the company's emphasis on the contract sector continue to pay off (profits here rose 8% in the first half), but its broad geographic wingspan is also keeping profits on an upward trajectory -- profits generated in the US jumped 16% in the period, and in mainland Europe these rose 7%.
The number crunchers certainly believe earnings should keep rolling higher, and have chalked in rises of 2% and 15% for the years to November 2017 and 2018 respectively.
These estimates leave the business dealing on a decent forward earnings multiple of 14.3 times, but this is not the only good news as the staffing specialist also offers great value for dividend chasers. Predicted dividends of 14p for this year and next result in a market-busting yield of 4.5%.
I reckon SThree, like CareTech has what it takes to deliver knockout returns in the coming years.
Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.